Theresa May’s plans for a ‘hard’ Brexit could wipe £240m off the potential size of the UK foodservice market this year, and a further £430m in 2018, figures released today have suggested.
The UK restaurant industry is poised for further growth over the next two years, but new data has indicated that the pace of expansion would be slightly slower under a ‘hard’ exit from the EU.
However, taking into account the size of the market, which equates to in excess of £55 billion a year, the gap between the ‘soft’ and ‘hard’ permutations is relatively narrow, largely because of the sector’s “resilience”.
According to NPD Group, total out-of-home foodservice spending for the year to November 2016 totalled £53.46 billion. Under a soft Brexit scenario, it was predicting 3.9% growth to £55.54 billion in 2017, and a further 3.7% increase to £57.60 billion in 2018.
But under the ‘hard’ Brexit scenario seemingly outlined by Prime Minister May yesterday, spend would increase 3.4% to $55.30 billion in 2017, and 3.4% to £57.17 billion in 2017.
The reason for the lower valuation under a hard Brexit scenario is that NPD predicts visits would drop 0.2% against last year’s figure, and experience a slightly smaller increase in 2018 of 1.3% to 11.43 billion.
Cyril Lavenant, foodservice director UK at the NPD Group, said: “The good news is that there’s a relatively narrow difference between ‘soft’ and ‘hard’ visit estimates for the next two years, even though Brexit clearly began to slow the pace of growth in 2016.
“For 2017, the difference in visits is +0.4% (‘soft’) versus -0.2% (‘hard’) and there’s a similar story for 2018 with a variation of +1.6% versus +1.3%. So with many parts of the British foodservice market showing clear signs of strength and resilience, we don’t anticipate a sharp drop, either in a ‘soft Brexit’ or ‘hard Brexit’ environment.”
The NPD Group believes that, in general, foodservice operators are well-placed to handle the uncertainty that Brexit could bring due to their track record of changing their menus, investing for the future and doing all they can to really understand their customers.
The QSR segment could stand to benefit the most. It has grown consistently in recent years, even through the 2008 recession, as it has proved itself to be more affordable, chain-driven and consistently injecting fresh investment.